The battle over leadership of a consumer watchdog created during the Obama administration headed into a fourth day as a judge declined to issue an immediate order blocking President Trump's pick as the regulator's acting director.

U.S. District Judge Timothy Kelly reserved decision Monday evening after hearing arguments about control of the Consumer Financial Protection Bureau from attorneys for the Department of Justice and for Leandra English, who has contended she should be the watchdog's interim leader.

English was appointed as deputy director of the consumer bureau on Friday in an 11th-hour move by Richard Cordray, the watchdog's departing director. She filed a lawsuit on Sunday that argued the appointment automatically made her the consumer bureau's acting director upon Cordray's resignation.

Her attorneys said the succession complied with the Dodd-Frank Wall Street reform act, the sweeping regulatory statute that created the consumer bureau after the national financial crisis.

Trump, however, named Mick Mulvaney, the federal budget director and a frequent critic of the consumer bureau, to serve simultaneously as the watchdog's interim director. The move was aimed at making an immediate break with the watchdog's Obama era leadership pending nomination and approval of a permanent director.

Deepak Gupta, an attorney for English, argued that allowing a top White House official to serve as the consumer bureau's acting leader would compromise the consumer bureau's statutory independence.

Department of Justice attorneys countered that issuing the restraining order sought by English's lawsuit would "sow confusion" about the consumer bureau's operations.

Kelly, nominated to the federal bench this year by Trump, indicated he would take additional time to study the legal issues before issuing any ruling The judge characterized the request for a restraining order as an "extraordinary remedy."

The unusual court fight, featuring one federal official suing the president, deepened the uncertainty surrounding the future of the consumer watchdog that oversees banks, mortgage providers, credit card issuers, student loans and other financial services that affect millions of Americans. The regulator has been criticized by both the financial services industry it oversees and congressional Republicans, even as it has drawn praise from consumer advocates and Capitol Hill Democrats.

Mulvaney showed up for work at the consumer bureau's Washington, D.C. headquarters Monday morning. He met with the watchdog's staffers as White House officials declared him the bureau's rightful interim leader.

During an afternoon news conference, Mulvaney said he had imposed a 30-day freeze on the watchdog's hiring, issuance of new rules or regulatory guidance, and payments from a civil penalties fund.

Saying the Trump administration's leadership of the consumer bureau would be "dramatically different" from its operations under Obama and Cordray, Mulvaney added that he had a mandate to get the regulator "back to the point where it can protect people without trampling on capitalism."

Although Mulvaney described the bureau as "an awful example of a bureaucracy that has gone wrong," he said he would not "set the place on fire or blow it up." Mulvaney also said he would stay away from the regulator if ordered to do so by the court.

Meanwhile, English met with congressional Democrats, including Sen. Elizabeth Warren, D-Mass. one of the main architects of the consumer bureau's creation after the national financial crisis. Warren told CNBC that English tried to outline her plans for the bureau during meetings with lawmakers from both major parties, but was rebuffed by Republicans.

Mulvaney said he had not seen English, and suggested that she had not appeared for work at the consumer bureau. He also said English might be funding the legal challenge with personal or other funds, while the Trump administration is being represented by the Department of Justice.

The battle hinges on competing arguments over leadership succession.

A legal memorandum filed on behalf of English argued that the Dodd-Frank Act mandates that the consumer bureau's deputy director "shall ... serve as the acting director in the absence or unavailability of the director."

That provision means English "serves in that capacity until such time as the President appoints and the Senate confirms a new director," the memo argued.

Several current and former Democratic congressional members asked for court approval to file a brief in support of the proposed restraining order, while, the White House, on Monday, released a legal advisory in which Mary McLeod, the consumer bureau's general counsel since 2016 under Cordray's tenure, argued that Trump has the legal authority to appoint Mulvaney.

The statutory language, legislative history, precedent from the Department of Justice's Office of Legal Counsel, and case law "all point to the conclusion that the President may use the Vacancies Reform Act" to appoint Mulvaney, wrote McLeod.

"I advise all Bureau personnel to act consistently with the understanding that Directory Mulvaney is the Acting Director of the CFPB," the advisory concluded.

Separately, White House spokeswoman Sarah Sanders said the Trump administration was unconcerned about any legal challenge.

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The Chamber of Commerce, the largest lobbying group in Washington by far, has filed a lawsuit against the Consumer Financial Protection Bureau to stop customers from filing class action lawsuits. Jose Sepulveda (@josesepulvedatv) has more.
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"Director Mulvaney has taken charge of that agency and he has the full cooperation of the staff, appeared this morning and things went very well on his first day at CFPB," Sanders said during an afternoon news briefing. "I think the legal outline says very clearly who is in charge of that agency."

Although Mulvaney in the past once described the watchdog as a "sick, sad" joke, Sanders said consumers have nothing to fear. She said Americans should be grateful that the bureau will "fight for consumers" and "not for their own political ambitions," as she said Cordray did.